KP Sharma Oli has been elected Prime Minister of Nepal for the second time, riding on the support of the left alliance, which comprises two major communist parties; Communist Party of Nepal-Unified Marxist Leninist (CPN-UML) and Communist Party of Nepal – Maoists Center (CPN-MC). Oli has taken over as Nepal’s Prime Minister at a time when the country has introduced a new federal structure.

What would the challenges be for the Oli government? How will he balance his neighbours, China and India? What will be its impact on India-Nepal relations?

Balancing the neighbours

A major challenge for Oli would be maintaining balanced relations with both neighbours, India and China. With the communist government and Oli’s perceived affinity towards China during his previous tenure, it is likely that the Chinese engagement in Nepal would increase. However, an increasing Chinese presence would be perceived by India as a threat to its security interest.

Oli’s first term as Prime Minister was highly contentious. Madhesis staged strong protests demanding amendments to the Constitution. They imposed an ‘economic blockade’ by creating disruptions along the Nepal-India border, which India ostensibly supported. Oli stood firmly against India and emerged as a ‘nationalist’ leader. There was an increase in anti-India sentiments and the relations between the two countries plummeted. He signed a number of agreements with China to challenge India’s predominant position in Nepal. Oli’s government collapsed in under ten months after coalition partner CPN-MC withdrew support. Oli called it an India ploy. Interestingly, when the CPN-MC formed an alliance with CPN-UML, the Indian media reported a Chinese hand behind it.

However, when the left alliance secured a landslide victory in the elections and Oli appeared set to take charge again as prime minister, Indian Prime Minister Narendra Modi called him twice to congratulate him. Modi invited Oli to Delhi while the latter extended an invitation to Modi welcoming him in Nepal.

India’s Minister for External Affairs Sushma Swaraj paid a two-day surprise visit to Kathmandu to hold the first meeting with the new Nepalese Prime Minister. She also attended a dinner hosted by Oli, in a clear indication that India wants to mend fences with Oli as an anti-India government in Nepal, at a time when China is raising its presence in South Asia, can be counter-productive. Similarly, Oli has realized that remaining in power by antagonizing India can be challenging. However, it would be too early to say that India has regained trust in Oli, once called “man-of-India”.

China sees Oli as a ‘nationalist’ leader who can challenge Indian interference. Hence, Beijing seeks to use this opportunity to implement its Belt and Road Initiative projects in Nepal. Oli has promised to accelerate those projects once in power and has also pledged to link Kathmandu with China through the railways. Whether he will work to fulfil his promises to the Nepali people or whether he would try to maintain closer ties with India to remain in power needs to be seen.

The left alliance won a huge majority as it promised development and stability. Over the last 10 years, Nepal has had 10 prime ministers. The lack of political stability has meant that Nepal has fallen behind in development.

Therefore, delivering development to the country’s people would be another major challenge for the Oli government. He has promised that, within five years, he would operate railways parallel to the East-West Highway, construct the Rasuwagadhi-Kathmandu-Pokhara-Lumbini Railway, operate railways along the Ring Roads of Kathmandu, hasten construction of the Kathmandu-Birgunj railways and operate metro-, mono-rail and other advanced means of transport. Though Oli might be able to bring political stability in Nepal, after forging a unification pact with the CPN-MC, delivering all these infrastructure projects and leading Nepal on the path of economic development is massively difficult.

Although Oli enjoys overwhelming majority support, it will not be easy for him to deal with the opposition in ways which would compromise the Nepali Congress and the Madhesi parties.

Madhesi parties have staged strong protests in the past demanding amendments in the Constitution. They have a sizeable presence in the present Parliament and the different factions have consolidated themselves into two strong Madhesi parties. Their demands have not been fully addressed. Similarly, it will not be easy for Oli to deal with other small left parties led by Netra Bikram Chand and Mohan Baidya. Historically, even a small opposition has halted the smooth functioning of government.

The CPN-UML and CPN-MC are working toward unification. Pushpa Kamal Dahal ‘Prachanda’ has stated that he would send ministers from his party only after the ‘package deal’ on party unification, sharing of power in the cabinet and sharing of power in the unified party is finalised. There are reports that power sharing would be done in the ratio of 60:40, where both Oli and Prachanda would be party chairman and both Oli and Prachanda would be prime minister on a rotational basis.

The unification process and management of leaders in the unified party will be equally challenging for Oli. Both CPN-MC and CPN-UML have several factions. CPN-MC has 4000 central committee members while CPN-UML has 200. They are planning to form a small, 99-member central committee in the integrated party. Similarly, ideology is crucial for the communist parties and both parties have conflicting ideologies. It will be a herculean task for both to provide a smooth transition to a unified party.

With challenges come opportunities. Though Oli has lots of challenges, he has several opportunities as well. He enjoys almost a two-third majority in Parliament, making it easy for him to take major decisions and bring amendments to appease the Madhesis. Similarly, by managing both neighbours, he can take Nepal on the path of development and stability by engaging them in Nepal’s economic transformation.

As India has already extended a hand to mend fences, Oli could easily win India’s confidence. However, balancing both India and China would not be easy for Oli as the interests of India and China overlap in Nepal. Oli should assure both its neighbours that Nepal would not allow its soil to be used against any of its neighbours and make them believe that a stable Nepal is in their interest. Only a stable Nepal would be able to address their prime interest – security.

Since India is getting claustrophobic with shrinking spaces in South Asia given a rising China, Nepal must assure India that its engagement with China is purely economic and it would make sure that India’s security concerns would not be hurt.

(Jaiswal is associated with the Institute of Peace and Conflict Studies in New Delhi and Ghimire is a Research Assistant with the Nepal Institute for International Cooperation and Engagement, Kathmandu. They can be contacted at pramodjai@gmail.com)